International Federation of Musicians Statement on Streaming Royalties (Or lack thereof)

Since the 2000s, the development of download platforms, then streaming services, has both contracted and expanded the music market. However, despite recently accelerating growth, the value thus created is not shared fairly. Indeed, the performers whose music creates this value receive little or no revenue when their recordings are used online with relatively few exceptions.

The implementation of the fundamental principles set out below is essential to, at last, guarantee the payment of a fair remuneration to music performers for the value transfer from their work. Such implementation must, in particular, rely on the proven mechanisms of collective management or collective bargaining.

1. Right to a fair remuneration

All music performers, whether featured or non-featured, should receive fair remuneration for each online use of their recordings, regardless of the technology used to access or distribute them.

Any act that does not meet the conditions for a download (choice of track + choice of time + choice of location) should not be covered by the right of Article 10

2. Scope of the right of making available on demand

The right of making available on-demand (article 10 of the WIPO Performances and Phonograms Treaty) provides performers with “the exclusive right of authorizing the making available to the public of their performances fixed in phonograms, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them”.

This right was formulated at the time of the transition from physical to digital distribution by download. The technological evolution that has allowed the development of streaming offers since 2008 was in no way anticipated when the WPPT was adopted in 1996. Article 10 could never have been the subject of a consensus if the community of performers had measured the risk of its erroneous application to all the uses offered by streaming platforms.

The right of making available on-demand is designed for cases where end-users choose what music they want to listen to, when to listen to it and where to listen to it. Thus, any act that does not meet the conditions for a download (choice of track + choice of time + choice of location) should not be covered by the right of Article 10.

In particular, it should not apply when a selection of tracks made by a third party (a natural person or an algorithm) is offered for listening to the consumer, following a personalization based on the choice of a style, an atmosphere, an artist or any other criterion leading to a limited and pre-established “playlist”.

3. Adaptation of remuneration schemes

Performers’ economic precariousness – highlighted during the COVID-19 pandemic – demonstrates that the exclusive right of making available on-demand (art. 10 of the WPPT), which can be assigned individually without any real compensation, is in itself unfit for embracing the current technological environment. The unilateral choice of platforms and the phonographic industry to apply this right to all forms of streaming, regardless of their level of interactivity or personalization, obviously serves the interests of these industries.

Non-featured performers generally receive a one-time, often purely symbolic, lump-sum payment in return for the transfer of their exclusive rights to the producer. Such unfair practices deprives them of a fair share of the revenue and value generated by their creative contribution. This structurally unbalanced contractual relationship can be corrected by resorting to collective bargaining.

More generally, collective bargaining constitutes a legitimate and effective means of improving the conditions for the transfer of a performer’s exclusive rights and their remuneration once assigned to the producer.

As grassroots protests by performers illustrate, the status quo is untenable. The streaming economy must switch paradigms to ensure fair remuneration for all performers and all types of online uses. Concerning non-interactive or partially interactive uses (playlists), the right to remuneration under Article 15, WPPT, which leads to an equal split of the equitable remuneration received from broadcasters and other users, constitutes a relevant reference model and precedent.

4. Transparency and access to information

All performers must receive and be able to access detailed information concerning the use of their recordings and the payments to which they are entitled. Payment of sums due to the artist must occur on the dates specified, must be subject to a compliance examination of platforms by performers to help assure correct payments, and must be accounted for regardless of the amount and without payment thresholds. National laws must include provisions guaranteeing the exercise of these rights.

5. Value of Music

Price competition between platforms and the priority they give to enterprise market valuation (as reflected in share price) over revenue may induce a devaluation of music in a race to the bottom on royalty payments while share price is booming. Access to a repertoire through output licenses set to grow endlessly for a flat-rate subscription – which has remained at the essentially same price point for more than ten years – does not seem capable of providing long-term sustainability for the creative sector given the dominant pro-rata royalty model.

6. User-centric model

In the vast number of cases, the pro-rata distribution of streaming revenues does not remunerate the featured artists’ right of making available, even when their contract provides (after the transfer of this right) for the payment of royalties. Instead, it creates a hyper-efficient market share distribution of revenue. This is not acceptable. It is also not acceptable for end-users to pay for music that they do not listen to, or that the music they listen to does not generate commensurate income for the artists concerned. This lack of direct correlation between listening and payment is a fundamental problem. Only the universal adoption of the “user-centric” distribution model can redress this injustice to both the fan and the performers. By allowing “niche” recordings, works or styles to generate remuneration, it also supports diversity and promotes local cultures. It should therefore be implemented, and the economic models adapted accordingly.

7. Duration of reference for the count of plays

The length of the tracks varies considerably according to the genre of music. Durations can range from less than two minutes for a variety track to several tens of minutes for a jazz or classical music track. The count of plays entitled to payment should take these differences into account by introducing a dose of proportionality. A longer track should trigger several payments as listening reaches certain thresholds to be negotiated.

By limiting the economic return on very short tracks, such an adaptation would avoid an excessively uniform offer. It would also positively affect diversity by partly redirecting payments towards less popular musical genres such as jazz or classical music. More generally, artistic creativity could be expressed more freely, without time constraints motivated by profitability objectives.

The @IvorsAcademy Joins the No Frozen Mechanicals Campaign

The Ivors Academy joins the campaign against frozen mechanical royalties for songwriters by the Copyright Royalty Board in the US. Ivors is the UK’s independent professional association for music creators and is a community of diverse, talented songwriters and composers across all styles. Their talent creates the music that the world loves. The organization was formerly known as the British Academy of Songwriters, Composers and Authors, and is home to the Ivors Awards named after Ivor Novello. Ivors Academy are leading advocates for songwriters across Europe and are leading the #BrokenRecord and #PaySongwriters campaigns that have resulted in an inquiry into music streaming by the UK Parliament. Follow them at @IvorsAcademy.

Against Frozen MechanicalsSupporting Frozen Mechanicals
Songwriters Guild of AmericaNational Music Publishers Association
Society of Composers and LyricistsNashville Songwriters Association International
Alliance for Women Film Composers 
Songwriters Association of Canada 
Screen Composers Guild of Canada 
Music Creators North America 
Music Answers 
Alliance of Latin American Composers & Authors 
Asia-Pacific Music Creators Alliance 
European Composers and Songwriters Alliance 
Pan African Composers and Songwriters Alliance 
North Music Group 
Blake Morgan 
David Lowery 
ATX Musicians 
Ivors Academy 

Three Nashville Songwriters Respond on Frozen Mechanicals

You should read this post by three Nashville songwriters published in the Nashville trade website Music Row who evidently are at the center of the negotiations and decisionmaking process on frozen mechanicals at the Copyright Royalty Board and have been for many years.  (One of the signers, Lee Miller, once considered running for Marsha Blackburn’s congressional seat on the Republican ticket in 2017.)  It is a heartfelt effort, although you do have to ask yourself where are the publishers?

The post is a very illuminating look inside the CRB process that many find mysterious, and also is a good demonstration of some of the concerns expressed by writers on The Trichordist on this subject.  The three accomplished Nashville songwriters add some color commentary to the proceedings, particularly for those who may have been in high school or college during the 2006 CRB frozen mechanical rate setting that many think caused the problem. 

The songwriters express a good deal of frustration and passion which is as understandable as the frustration and passion of those who feel that the CRB process is as inequitable, unwieldy and prohibitively expensive as these songwriters seem to be telling us that it is.  Someone may want to do a point by point discussion of the many good issues that the three Nashville songwriters raise, but a couple things jump out.

First, they defend the streaming mechanical rate from the last CRB. No one criticized the streaming mechanical rate in the last CRB proceeding that is currently under appeal.  If the rate survives the appeal and reworking at the CRB, and makes its way through the MLC, every songwriter should expect to see the promised increase in their streaming royalty check.  That would be a great thing and everyone no doubt thanks everyone involved for the effort.  The topic, though, was primarily the frozen mechanical not the streaming mechanical.

Also, who paid the $20 million cost for “our side” to participate in the CRB that the three Nashville songwriters refer to?  Surely the publishers did not ask the songwriters to open up their own pocketbooks, even though each has been extraordinarily successful in their genre. 

We couldn’t find any discussion by the three Nashville songwriters of what terms are in the private settlements referred to in their own filing.  The point that many have made about public commentary about the private settlements is that the Copyright Royalty Judges can decide on who is “bound” by the settlements and that it is the motion at issue as filed that gets commented on unless the Judges ask that it be supplemented.  Commenters said the “who” should be broadly construed.  They also said that the “what” is crucially important. Many have made the point that public commentary about the settlements requires that all the terms of the settlements are made public. Until made public, the terms are private.  The only thing we know about the settlements from the three Nashville songwriters’ own CRB filing is the terms that are disclosed—frozen rates.  Even though their filing refers to settlements, we still don’t know anything further.  Maybe we will in coming days.  Any additional terms that exist may not be remarkable, but they might be.  Presumably this is the kind of thing that important people in the negotiation process would know due to their special position.  We just don’t know.

The three Nashville songwriters apparently believed they had a mandate to make decisions about what was worth pursuing in the CRB.  If they did have that belief, presumably they base that belief on some kind of vote.  Since their CRB settlement impacts every songwriter in the world, that’s the magnitude of decision that some might think is deserving of a vote of their membership, not just a board vote if that’s what happened—we just don’t know.  It’s a real privilege to be in the position to make those kinds of decisions, so you might well think that it’s the kind of thing you wouldn’t want to take on by yourself or with only the approval of a limited number of people.  But maybe not. 

Be sure to read this post and thank these songwriters for their service to the community.  They certainly deserve it.

ATX Musicians Joins Opposition to Frozen Mechanicals

Against Frozen MechanicalsSupporting Frozen Mechanicals
Songwriters Guild of AmericaNational Music Publishers Association
Society of Composers and LyricistsNashville Songwriters Association International
Alliance for Women Film Composers 
Songwriters Association of Canada 
Screen Composers Guild of Canada 
Music Creators North America 
Music Answers 
Alliance of Latin American Composers & Authors 
Asia-Pacific Music Creators Alliance 
European Composers and Songwriters Alliance 
Pan African Composers and Songwriters Alliance 
North Music Group 
Blake Morgan 
David Lowery 
ATX Musicians 

Professor Kevin Casini (@KCEsq) Asks Congress and the CRJs for Meaningful Public Comment on Frozen Mechanical Royalty Settement

May 27, 2021

Senator Richard Blumenthal
90 State House Square
Hartford, CT 06103

Senator Chris Murphy
Colt Gateway
120 Huyshope Avenue, Suite 401
Hartford, CT 06106
Hon. C.J. Jesse M. Feder
Hon. J. David R. Strickler
Hon. J. Steve Ruwe

US Copyright Royalty Board
101 Independence Ave SE / P.O. Box 70977
Washington, DC 20024-0977

Senators Blumenthal and Murphy, and Honorable Judges of the Copyright Royalty Board:

I am a Connecticut resident, attorney, and law professor, and the views expressed here are mine, and not necessarily those of any local or state bar association, or any employer. I am an active participant in politics local, state, and federal. I am a registered non-affiliate in New Haven. And I need your attention for about ten minutes.

On May 18, 2021, a “Notice of Settlement in Principle” was filed by parties to the proceedings before the Copyright Royalty Board about its Determination of Royalty Rates and Terms for Making and Distributing Phonorecords.[1] That Notice was followed on May 25, 2021 by a Motion To Adopt Settlement Of Statutory Royalty Rates And Terms For Subpart B Configurations, filed by the NMPA, Sony, Universal and Warner and NSAI.[2] I write today in reference to that proposed settlement.

This settlement outlines the terms by which mechanical royalty[3] and download rates will remain locked at the current rate of 9.1¢. The same almost-dime for each copy of a work manufactured and distributed. The same almost-dime that it’s generated since 2006. A paltry sum to be certain but a far cry from the 2¢ royalty rate mechanical royalties imposed for the better part of seventy years.[4] Starting in 1977, Congress mandated that the mechanical royalty be increased incrementally until 2006 when the rate of 9.1¢ was achieved. And there it has remained.

This proposed private settlement would extend that 2006 freeze until 2027.

In March 2017, a precursor to Phonorecords IV found the Copyright Royalty Board ruling that interactive streaming services must pay more in mechanical royalties over the course of the next five years.[5] Surely more than a simple inflation adjustment, but nonetheless a sign that the CRB thought costs and values needed to become more aligned for streaming—which is paid by the streaming platforms unlike the physical and download mechanical which is paid by the record companies. Now comes Phonorecords IV, and a proposed settlement from the major publishers and their affiliated major labels. Before this proposal can be accepted by the CRB, I asked for the simple opportunity of public comment.

As you well know, in nearly all other administrative proceedings public comment is an integral and indispensable component of the process. To see that the CRB may allow for a public comment period by members of the public beyond the participants in the proceeding or parties to the settlement is a step in the right direction, and my hope is that this development will be broadcast far and wide so that the CRB, and in turn, Congress, may get a full picture of the status of mechanical royalty rates, especially from those that are historically underrepresented. “Public comments” should be comments by the public and made in public; not comments by the participants made publicly.

Let me back up and state that I have a great deal of respect and admiration for the work put into the landmark copyright legislation that came about at the end of 2018, and for those that made it happen. So too for the members of the CRB, and in this space, I thank those Judges for taking the time to read a letter from an adjunct law professor with no economic stake in the outcome, but rather an interest in, and duty of, candor to the Court.

In an age of unprecedented political polarization, the consensus built in the passage of the Music Modernization Act showed that politics aside, when it’s time to make new laws that fix old problems, Congress can still get the job done. I know well the sweat-equity poured into its creation by the very same people that propose this settlement. I have found myself on the same side fighting the same fight as them many times. They have proven capable of navigating your halls and taking on those that would seek to devalue (or worse) the work of the songwriter, and musician. In this instance, I would like to see them fight the fight yet again. recognize the reasoning and intention behind the proposed settlement. Comment by the public made publicly is a way for that to happen.[6]

Our state, Connecticut, has a long and storied history with music. In 1956, The Five Satins recorded what would go on to be one of the most recognizable and beloved doo-wop songs in history. “In The Still of the Night” was ranked 90th in Rolling Stone’s list of Top 500 songs of all time.[7] Five years later, the 1961 Indian Neck Folk Festival was where a young Bob Dylan’s first recorded performance.[8] That young man turned into a fine songwriter, as evidenced by the 4,000+ covers recorded of his works, and his record sale last year of his publishing royalties.[9] And no one will forget Jim Morrison’s arrest at the old New Haven Arena, December 1967. Ticket price: $5.00. Connecticut is home to more than 14,000 registered songwriters, only a small percentage of whom have engaged a music publisher. These writers are considered “self-publishing”, but the reality is, they have no publishing. Ironically, it is these independent writers who rely disproportionately on physical sales, direct downloads, and Bandcamp Fridays.[10]

A year ago, I made the unilateral decision to pivot our consulting company, Ecco Artist Services, to purposefully work with, and advocate for, the traditionally and historically underserved and underrepresented in the music industry. Freezing the growth of rates for physical and digital sales that are already digging out of the residual effects of 70 years at 2¢ strikes at the heart of that community’s ability to generate revenues from their music.

Sadly, rate freezes for mechanical royalties are nothing new. I’ll tell you what has not been frozen since 2006: the cost of living. According to the U.S. Bureau of Labor Statistics, prices for rent of primary residence were 53.49% higher in 2021 versus 2006 (a $534.91 difference in value). Between 2006 and 2021 rent experienced an average inflation rate of 2.90% per year. This rate of change indicates significant inflation. In other words, rent costing $1,000 in the year 2006 would cost $1,534.91 in 2021 for an equivalent purchase. Compared to the overall inflation rate of 1.82% during this same period, inflation for rent was higher.[11] Milk? How about 19.48%.[12] Childcare? In Connecticut? Senators, you don’t even want to know.[13]

Now, it’s no secret the trade association for the US music publishing industry is funded by its music publisher members, and of course, as a professional trade organization, the association is bound to represent those members. Publishers have long enjoyed a better reputation amongst industry insiders than “the labels,” and for good reason, but the fact remains that writers signed to publishing deals are in contractual relationships with their publishers, and their interests are not always aligned. Such is the state of play in a consumer-driven marketplace, and especially now that publishers and labels are consolidating their businesses under the same tents.

Unfortunately, the independent songwriter lacks the resources to participate fully in the process, and although a signed songwriter may believe her interests and those of her publisher are one and the same, they may not always be. It would seem the economic analysis the publishers undertook in deciding the mechanical royalty was not worth the heavy cost and burden of fighting is the same calculus the writers need not do: they couldn’t afford the fight no matter the decision.

But I ask: if the mechanical royalty covered by the proposed settlement is a dying source of revenue, why would the fight be so onerous? By the RIAA’s 2020 year-end statistics, physical sales and downloads accounted for 15% of the music marketplace.[14] That’s a $12.2 billion marketplace, and that 15% amounts to $1.8 billion. Now, I know attorney’s fees can be exorbitant in regulatory matters, but I would think we could find a firm willing to take the case for less than that. As for sales, in 2020, 27.5 million vinyl LPs were sold in the United States, up 46-percent compared to 2019 and more than 30-fold compared to 2006 when the vinyl comeback began,[15]  while some 31.6 million CD albums were sold.[16]

Median wages in the US, adjusted for inflation, have declined 9% for the American worker. Meanwhile, since the 9.1¢ rate freeze, the cost of living has gone up 31%, according to the American Institute of Economic Research[17]. The 2006 inflation rate was 3.23%. The current year-over-year inflation rate (2020 to 2021) is now 4.16%[18], which is all really to say, simply, an accurate cost-of-living increase would have a mechanical rate of at least 12¢ per sale. Twelve cents! You would think that would be an easy sell, but the streaming rates are fractions of that rate. The reality is a song would need to be streamed 250 times to generate enough money to buy it from iTunes. As my dear friend Abby North put it, the royalty amount for the digital stream of a song is a micro penny.[19]

An adjustment for inflation should require no briefing, let alone argument. If songwriters were employees, this would simply be line-item budgeted as a “cost-of-living adjustment.” If songwriters were unionized it would be a rounding error, but I digress.

A period and opportunity for the general public to comment publicly and on the record in these and other proceedings before the presentation to the CRB of this proposed settlement is in the interest of all involved. Even if it is true that the mechanical revenue is a lost and dying stream, by the RIAA’s own figures, there stand to be billions of dollars at stake. An opportunity to be heard, without having to sign with a publisher and then hope that publisher takes up the fight you want, maybe that’s all the independent writers of the industry—and, indeed, the world–need to be able to win.

In addition to a meaningful public comment period, and an inflation-adjusted cost-of-living update to the mechanical statutory royalty rate at issue, I’d ask that this letter be made a part of the Phonorecords IV public record and that you review the best practices of the Copyright Royalty Board. Not only so that those independent, self-published writers affected by its decision may voice their concerns through public comments that the CRB considers before it makes its final decision, but so that those of us that speak without financial stake in the matter can provide perspective from a policy and legal perspective.

I want to close by thanking the Board, and Copyright Office, the Judiciary Committee and the Intellectual Property Subcommittee, and the Copyright Royalty Board for their continued attention to the universe of copyright, licensing royalties, and the economy that exists therein. Lord knows there are lots of fires to be put out all over and the time spent and thought given to these policies is acknowledged and appreciated.

Kevin M. Casini
New Haven, CT

Attorney-at-Law, Adj. Professor, Quinnipiac Univ. School of Law

cc: Ms. Carla Hayden, US Librarian of Congress

Ms. Shira Perlmutter, US Register of Copyrights


[1] (Phonorecords IV) (Docket No. 21–CRB–0001–PR (2023–2027)).

[2] Available at https://app.crb.gov/document/download/25288

[3] The term “mechanical royalty” dates back to the 1909 Copyright Law when Congress deemed it necessary to pay a music publishing company for the right to mechanically reproduce a musical composition on a player-piano roll. As a result, music publishers began issuing “mechanical licenses”, and collecting mechanical royalties from piano-roll manufacturers. The times, and the tech, changed, but the name stuck.

[4] A summary of historical mechanical royalty rates is available from the U.S. Copyright Office at https://www.copyright.gov/licensing/m200a.pdf

[5] Docket No. 16-CBR-0003-PR (2018-2022) (Phonorecords III).

[6] The CRB arguably has the statutory obligation to publish the Motion in the Federal Register for public comment, but may have the discretion to construe those commenting to the participants in the proceeding and the parties to the settlement.  17 U.S.C. § 801(b)(7).  It would be unfortunate if the Judges narrowly construed that rule to the exclusion of the general public, unlike the Copyright Office regulatory practice.

[7] “Rolling Stone’s 500 Greatest Songs of All Time”. Rolling Stone. April 2010.

[8] “Looking Way Back, As Bob Dylan Turns 60” Roger Catlin, Hartford Courant May 24, 2001
https://www.courant.com/news/connecticut/hc-xpm-2001-05-24-0105241174-story.html

[9] “Bob Dylan Sells His Songwriting Catalog in Blockbuster Deal” Ben Sisario, New York Times, December 7, 2020. https://www.nytimes.com/2020/12/07/arts/music/bob-dylan-universal-music.html

[10] Bandcamp Fridays Brought in $40 Million for Artists During Covid Pandemic Ethan Millman, Rolling Stone December 15, 2020

[11] https://www.officialdata.org/Rent-of-primary-residence/price-inflation/2006-to-2021?amount=1000

[12] https://www.in2013dollars.com/Milk/price-inflation/2006-to-2021?amount=4

[13] According to the U.S. Bureau of Labor Statistics, prices for childcare and nursery school were 52.57% higher in 2021 versus 2006 (a $5,256.98 difference in value).

Between 2006 and 2021: Childcare and nursery school experienced an average inflation rate of 2.86% per year. This rate of change indicates significant inflation. In other words, childcare and nursery school costing $10,000 in the year 2006 would cost $15,256.98 in 2021 for an equivalent tuition. Compared to the overall inflation rate of 1.82% during this same period, inflation for childcare and nursery school was higher.

[14] RIAA year-end revenue statistics. https://www.riaa.com/wp-content/uploads/2021/02/2020-Year-End-Music-Industry-Revenue-Report.pdf

[15] MRC 202 Year End Report. https://static.billboard.com/files/2021/01/MRC_Billboard_YEAR_END_2020_US-Final201.8.21-1610124809.pdf

[16] Id.

[17] American Institute for Economic Research. https://www.aier.org/cost-of-living-calculator/

[18] U.S. Bureau of Labor Statistics Consumer Price Index https://www.officialdata.org/articles/consumer-price-index-since-1913/

[19] Abby North, North Music Group Letter to Congress on Frozen Mechanicals and the Copyright Royalty Board, The Trichordist (May 24, 2021) available at https://thetrichordist.com/2021/05/24/northmusicgroup-letter-to-congress-on-frozen-mechanicals-and-the-copyright-royalty-board/

Another Call for Congressional Oversight of the Proposed Settlement of Physical and Download Mechancials

[Editor T says pay close attention to Gwen Seale’s analysis of the side deal.]

Gwendolyn Seale, Esq.

May 26, 2021

The Hon. John Cornyn III
517 Hart Senate Office Building
Washington, DC 20510

The Hon. Ted Cruz
Russell Senate Office Building 127A
Washington, DC 20510


SENT VIA EMAIL

Re: Potential Settlement of Mechanical Royalty Rates in CRB Phonorecords IV

Dear Senators Cornyn and Cruz,

I am a music lawyer in Austin, Texas, and represent songwriters located throughout our great state. The views I express here are my own and are not on behalf of any of my clients or the State Bar of Texas.

I am contacting you as I am deeply troubled by the private party settlement of mechanical royalty rates pertaining to physical product and digital sales in the “Determination of Royalty Rates and Terms for Making and Distributing Phonorecords (Phonorecords IV)” currently pending before the Copyright Royalty Board (CRB).

Background / Historical Context


With the constant consumption of music occurring via the streaming services, many do not realize the degree of revenue generated from the sale of physical products (vinyl, CDs)  and digital downloads in the United States. Notwithstanding the devastating pandemic which forced the majority of workers to pivot, and resulted in at the very least the temporary shutdown of a significant amount of businesses, revenue from the physical music sales amounted to $1.13 billion dollars in 2020 (YEAR-END 2020 RIAA REVENUE STATISTICS). Additionally, vinyl record sales increased by more than 28% from 2019 to 2020.  Physical and downloads accounted for 15% of worldwide revenue for U.S. recorded music in 2020.

The current statutory mechanical royalty rate pertaining to physical products and digital downloads in the United States is 9.1 cents per song per record sold and has been so since 2006. To give some historical context, this statutory rate was frozen at 2¢ from 1909 to 1978.  Congress mandated that the rate be incrementally increased beginning in 1978, following the passage of the 1976 Copyright Act, from 2¢ to the 9.1 ¢ minimum rate in 2006. Prior to the passage of the 1976 Copyright Act, this rate had been frozen at 2 cents for 69 years.

The participants in this current private party settlement request that the 9.1¢ rate remain frozen through 2027, which results in this rate remaining the same for over 20 years. Note that the mechanical royalties pertaining to physical product sales are paid to songwriters and publishers by record companies and not by streaming services.  The Big 3 record companies also own the Big 3 music publishers who are the major members of the National Music Publishers Association, so the licensee record companies literally take the money for mechanicals out of one pocket and place it in the other—songs and recordings are tied together.

Mechanical royalties from physical product sales are a crucial revenue stream for independent songwriters – for Texan songwriters. In contrast, the mechanical royalty “rate” pertaining to streams on Spotify Premium during April 2020 amounted to $0.00059 per stream (according to the Audiam U.S. Mechanical rate calculator: https://resources.audiam.com/rates/ ). The “rate” for the ad-supported tier of Spotify was even lower. Note that the mechanical royalties pertaining to interactive streaming are paid by the streaming services.  The streaming services are not parties to the private party settlement.

The Private Party Settlement

I find it important to provide the aforementioned context because there is a serious lack of education regarding copyright, the various royalty streams pertaining to music and the innerworkings of the music industry. And if you happen to be a songwriter, particularly a songwriter outside of the Los Angeles, New York or Nashville hubs, this education gap expands exponentially. So now, let us draw our attention to this private party settlement.

The initial area of my concern pertains to the participants requesting the settlement. On one side, you have the major record companies, consisting of Universal Music Group, Sony Music Entertainment and Warner Music Group. On the other side, you have one trade organization, the NMPA, which represents certain music publishers, including publishing company affiliates of the major record companies (Universal Music Publishing Group, Sony Music Publishing, and Warner/Chappell Music Publishing) which companies have representation on the board of the NMPA.  You also have another trade organization, the Nashville Songwriters Association International, which represents a fragment of the songwriter community. This unequivocally presents a conflict of interest: how can songwriters be adequately represented when one of the two parties to the settlement, which are claims to advocate for the songwriters and publishers, is comprised of affiliated major record companies on the opposite side of the negotiation?  The Trichordist asked the question—if the willing buyer and the willing seller are the same person, is that a free market?

The settlement participants stated the following in MOTION TO ADOPT SETTLEMENT OF STATUTORY ROYALTY RATES AND TERMS FOR SUBPART B CONFIGURATIONS, Docket No. 21-CRB-0001-PR (2023–2027) at 4:

“And because the Settlement represents the consensus of buyers and sellers representing the vast majority of the market for “mechanical” rights for [physical, permanent downloads, ringtones and music bundles]…”

This settlement does not represent the consensus of songwriters; this settlement represents “buyers” and “sellers” who are one in the same at the corporate level.

Songwriters should have been included in these negotiations from the outset. But, at the bare minimum, parties to transactions involving the fate of this critical revenue stream for songwriters should be transparent to the people they purport to represent. Neither of the foregoing are occurring. Only after the circulation of a rash of articles concerning this issue did the settlement participants respectfully request that the CRB post the royalty rates and terms of the settlement in the Federal Register for public notice and comment.

There are plenty of organizations that represent our country’s songwriters which could provide feedback and suggestions without the presence of conflict, and it is simply disingenuous to ask those parties for their comments following a settlement being presented to the CRB for adoption as a done deal. Any public comments are and will be utterly predictable; songwriter advocates simply ask for an increase in this mechanical rate. Songwriter advocates foresee history repeating itself, with an increase in this rate occurring sometime around this country’s Tri-centennial.

Transparency equates to honesty, and on the flip side of the coin, a lack of transparency leads to distrust. As such, along with providing my concerns about the nature of this settlement, and the dire need for honesty in connection with settlements that affect every Texan songwriter and every songwriter in this country, I request that you press the CRB to request that the settlement parties disclose not only the actual settlement agreement (not just the regulations giving effect to the settlement) but also the “Memorandum of Understanding” referenced in MOTION TO ADOPT SETTLEMENT OF STATUTORY ROYALTY RATES AND TERMS FOR SUBPART B CONFIGURATIONS, Docket No. 21-CRB-0001-PR (2023–2027) at 3.

“Concurrent with the settlement, the Joint Record Company Participants and NMPA have separately entered into a memorandum of understanding addressing certain negotiated licensing processes and late fee waivers.”

If this “Memorandum of Understanding” was irrelevant to this settlement, the language would not have been included in this motion filed by the settlement participants. Setting aside the broadly drafted “certain negotiated licensing processes,” the phrase “late fee waivers” is exceptionally concerning, given the aforementioned context. It sounds like money is changing hands and it is consideration for the frozen mechanical—but only for a select few who were invited to the multi-tiered negotiation.

Thank you for your time and I am more than happy to discuss these issues with you anytime.

Best Regards,

Gwendolyn Seale

@theBlakeMorgan Joins the List Opposing Frozen Mechanicals at the Copyright Royalty Board #irespectmusic

Blake Morgan songwriter, publisher, producer and label owner, two-time U.S. Supreme Court amicus, founder of the #irespectmusic campaign and relentless artist rights advocate joins the list opposing frozen mechanicals on vinyl and physical. “This is about so many things, but we simply must fight to keep digging out from a 68 year injustice. Big thanks to the inspirational Abby North for standing up for fairness and transparency!”

BlakeIRespectMusic

Against Frozen MechanicalsSupporting Frozen Mechanicals
Songwriters Guild of AmericaNational Music Publishers Association
Society of Composers and LyricistsNashville Songwriters Association International
Alliance for Women Film Composers 
Songwriters Association of Canada 
Screen Composers Guild of Canada 
Music Creators North America 
Music Answers 
Alliance of Latin American Composers & Authors 
Asia-Pacific Music Creators Alliance 
European Composers and Songwriters Alliance 
Pan African Composers and Songwriters Alliance 
North Music Group 
Blake Morgan 

@KayHanley Reaction to @NorthMusicGroup Letter to Congress on Frozen Mechanicals and Copyright Royalty Board

Copyright Royalty Board Responds to Coalition of Songwriter Groups on Frozen Mechanicals

A group of songwriter organizations from around the world wrote to the Copyright Royalty Board last week opposing a proposed private “settlement” between the major labels and the major publishers to freeze mechanical rates on physical and downloads at the 9.1¢ 2006 rate that was filed in the current Copyright Royalty Board (CRB) rate court hearing called “Phonorecords IV”. (You can find the entire list of filings in the case here.)

The twist here is that if the CRB approves the private settlement at the request of “the parties” and doesn’t take into account the views and evidence of people who actually write songs and have to earn a living from songwriting, it will be grotesquely unfair and possibly unconstitutional wage and price control. The CRB will have frozen the mechanical rate for physical and downloads at the 2006 rate when inflation alone has eaten away the buying power of that royalty by approximately 30%. This would be like the Minerals Management Service adopting a settlement written by Exxon.

On average–on average–the physical and download configuration make up 15% of billing for the majors and for some artists vinyl is a welcome change from fractions of a penny on streaming. And then there’s Record Store Day–hello? These are a couple of the many reasons anyone who is paying attention should reject the terms of the settlement.

US Revenue by Source 2020

The Coalition had a simple ask: Let the public comment:

In the interests of justice and fairness, we respectfully implore the CRB to adopt and publicize a period and opportunity for public comment on the record in these and other proceedings,especially in regard to so-called proposed “industry settlements” in which creators and other interested parties have had no opportunity to meaningfully participate prior to their presentation to the CRB for consideration, modification or rejection. In the present case, hundreds of millions of dollars of our future royalties remain at stake, even in a diminished market for traditional, mechanical uses of music. To preclude our ability to comment on proposals that ultimately impact our incomes, our careers, and our families, simply isn’t fair.

The Copyright Royalty Board responded! According to our sources, the Copyright Royalty Board said that they would publish the private settlement in the Federal Register and give the pubic the chance to comment. This is great news!

But we will see what they actually do. The Copyright Royalty Board does not have a great track record in understanding songwriter interests in raising the mechanical rates as we can see in this except from their final rule freezing mechanicals again in 2009:

Copyright Owners’ argument with respect to this objective is that songwriters and music publishers rely on mechanical royalties and both have suffered from the decline in mechanical income. Under the current rate, they contend, songwriters have difficulty supporting themselves and their families. As one songwriter witness explained, “The vast majority of professional songwriters live a perilous existence.” [Rick] Carnes [Testimony] at 3. [Rick Carnes signed the Coalition letter as President of the Songwriters Guild of America.] We acknowledge that the songwriting occupation is financially tenuous for many songwriters. However, the reasons for this are many and include the inability of a songwriter to continue to generate revenue-producing songs, competing obligations both professional and personal, the current structure of the music industry, and piracy. The mechanical rates alone neither can nor should seek to address all of these issues.

We simply do not accept that the Founders put the Copyright Clause in the Constitution so creators could have a side hustle for their Uber driving which is exactly where frozen mechanicals take you, particularly after the structural unemployment in the music business caused by the COVID lockdowns.

Here is a summary of who is for and who is against frozen mechanicals.

Against Frozen MechanicalsProposing Frozen Mechanicals
Songwriters Guild of AmericaNational Music Publishers Association
Society of Composers and LyricistsNashville Songwriters Association International
Alliance for Women Film Composers 
Songwriters Association of Canada 
Screen Composers Guild of Canada 
Music Creators North America 
Music Answers 
Alliance of Latin American Composers & Authors 
Asia-Pacific Music Creators Alliance 
European Composers and Songwriters Alliance 
Pan African Composers and Songwriters Alliance 

Which side are you on? If you want to write your own comment to the Copyright Royalty Board about frozen mechanicals, send your comment to crb@loc.gov

Coalition of Songwriter Groups Call on Copyright Royalty Board for Fairness and Transparency on Frozen Mechanicals

[Editor T says this is a letter from a coalition of US and international songwriter groups to the Copyright Royalty Board about the frozen mechanical issue. If you want to write your own comment to the Copyright Royalty Board about frozen mechanicals, send your comment to crb@loc.gov]

MUSIC CREATORS
NORTH AMERICA

May 17, 2021

Via Electronic Delivery

Chief Copyright Royalty Judge Jesse M. Feder
Copyright Royalty Judge David R. Strickler
Copyright Royalty Judge Steve Ruwe
US Copyright Royalty Board
101 Independence Ave SE / P.O. Box 70977
Washington, DC 20024-0977

To Your Honors:

As a US-led coalition representing hundreds of thousands of songwriters and composers from across the United States and around the world, we are writing today to express our deep concerns over the “Notice of Settlement in Principle” recently filed by parties to the proceedings before the Copyright Royalty Board concerning its Determination of Royalty Rates and Terms for Making and Distributing Phonorecords (Phonorecords IV) (Docket No. 21–CRB–0001–PR<(2023–2027)). For reasons explained below, several highly conflicted parties to this proceeding have apparently agreed to propose a rolling forward to the year 2027 of the current US statutory mechanical royalty rate for the use of musical compositions in the manufacture and sale of physical phonorecords (such as CDs and vinyl records). This proposal (and related industry agreements yet to be disclosed by the parties— see, https://app.crb.gov/document/download/23825) should neither be acted upon nor accepted by the CRB without the opportunity for public comment, especially by members of the broad community of music creators for whom it is financially unfeasible to participate in these proceedings as interested parties. It is our livelihoods that are at stake, and we respectfully ask to be heard even though we lack the economic means to appear formally as parties. If procedures are already in place to accommodate this request, we look forward receiving the CRB’s instructions as to how to proceed.

The current U.S statutory mechanical rate for physical phonorecords is 9.1 cents per musical composition for each copy manufactured and distributed. That rate has been in effect since January 1, 2006. It represents the high-water mark for US mechanical royalty rates applicable to physical products, a rate first established in 1909 at 2 cents. That 2-cent royalty rate, in one of the most damaging and egregious acts in music industry history, remained unchanged for an astonishing period of sixty-nine years, until 1978. Nevertheless, the recording industry now seeks  to repeat that history by freezing the 9.1 cent rate for an era that will have exceeded twenty years by the end of the Phonorecords IV statutory rate setting period.

Inflation has already devalued the 9.1 cent rate by approximately one third. By 2027, 9.1 cents may be worth less than half of what it was in 2006. How can the US music publishing industry’s trade association, and a single music creator organization (which represents at most only a tiny sliver of the music creator community) have agreed to such a proposal?

The answer to that question is an easy one to surmise. The three major record companies who negotiated the deal on one side of the table have the same corporate parents as the most powerful members of the music publishing community ostensibly sitting on the other side of the table. Songwriter, composer and independent music publisher interests in these “negotiations” were given little if any consideration, and the proposed settlement was clearly framed without any meaningful consultation with the wider independent music creator and music publishing communities, both domestically and internationally.

How on earth can these parties be relied upon to present a carefully reasoned, arms-length “Settlement in Principle” proposal to the CRB under such circumstances, fraught as they are with conflicts of interest, without at least an opportunity for public comment? Further, how can these parties be relied upon in the future to argue persuasively that mechanical royalty rates applicable to on-demand digital distribution need to be increased as a matter of economic fairness (which they most certainly should be), when they refuse to seriously conduct negotiations on rates applicable to the physical product the distribution of which is still controlled by record companies (who not so incidentally also receive the lion’s share of music industry revenue generated by digital distribution of music)?

The ugly precedent of frozen mechanical royalty rates on physical product has, in fact, already served as the basis for freezing permanent digital download royalty rates since 2006. Is this the transparency and level playing field the community of songwriters and composers have been promised by Congress through legislation enacted pursuant to Article I, Section 8 of the Constitution?

The trade association for the US music publishing industry is supported by the dues of its music publisher members, the costs of which are often in large part passed along to the music creators affiliated with such publishers. It is thus mainly the songwriter and composer community that pays for the activities of that publisher trade association, a reality that has existed since that organization’s inception. Still, the genuine voice of those songwriters and composers is neither being sought nor heard. Further in that regard, we wish to make it emphatically clear that regardless of how the music publishing industry and its affiliated trade associations may present themselves, they do not speak for the interests of music creators, and regularly adopt positions that are in conflict with the welfare of songwriters and composers. Their voice is not synonymous with ours.

Unfortunately, the music creator community lacks the independent financial resources –in the age of continuing undervaluation of rights, rampant digital piracy and pandemic-related losses–to rectify these inequities by expending millions more dollars to achieve full participation in CRB legal and rate-setting proceedings. Clearly, such an inequitable situation is antithetical to sound Governmental oversight in pursuit of honest and equitable policies and results.

In the interests of justice and fairness, we respectfully implore the CRB to adopt and publicize a period and opportunity for public comment on the record in these and other proceedings,especially in regard to so-called proposed “industry settlements” in which creators and other interested parties have had no opportunity to meaningfully participate prior to their presentation to the CRB for consideration, modification or rejection. In the present case, hundreds of millions of dollars of our future royalties remain at stake, even in a diminished market for traditional, mechanical uses of music. To preclude our ability to comment on proposals that ultimately impact our incomes, our careers, and our families, simply isn’t fair.

Finally, we request that this letter be made a part of the public record of the Phonorecords IV
proceedings. We extend our sincere thanks for your attention to this very difficult conundrum
for music creators, and further note that your consideration is very much appreciated.

Respectfully submitted,

Rick Carnes
President, Songwriters Guild of America

Ashley Irwin
President, Society of Composers and Lyricists
Officer, Music Creators North America Co-Chair, Music Creators North America

List of Supporting Organizations
Songwriters Guild of America (SGA), https://www.songwritersguild.com/site/index.php
Society of Composers & Lyricists (SCL), https://thescl.com
Alliance for Women Film Composers (AWFC). https://theawfc.com
Songwriters Association of Canada (SAC), http://www.songwriters.ca
Screen Composers Guild of Canada (SCGC), https://screencomposers.ca
Music Creators North America (MCNA), https://www.musiccreatorsna.org
Music Answers (M.A.), https://www.musicanswers.org
Alliance of Latin American Composers & Authors (ALCAMusica), https://www.alcamusica.org
Asia-Pacific Music Creators Alliance (APMA), https://apmaciam.wixsite.com/home/news
European Composers and Songwriters Alliance (ECSA), https://composeralliance.org
Pan-African Composers and Songwriters Alliance (PACSA), http://www.pacsa.org

cc: Ms. Carla Hayden, US Librarian of Congress
Ms. Shira Perlmutter, US Register of Copyrights
Mr. Alfons Karabuda, President, International Music Council
Mr. Eddie Schwartz, President, MCNA and International Council of Music Creators (CIAM)
The MCNA Board of Directors
The Members of the US Senate and House Sub-Committees on Intellectual Property
Charles J. Sanders, Esq.